Transcript Chapter 7: SMALL BUSINESS AND ENTREPRENEURSHIP

Chapter 7: SMALL BUSINESS AND
ENTREPRENEURSHIP
Economic Rocket Fuel
Copyright © 2011 by Nelson Education Ltd.
1
LOOKING AHEAD
•
Why do individuals start
businesses?
•
What is the mindset and what are
the characteristics of an
entrepreneur?
•
What are the opportunities and
threats for small businesses?
•
What are options for starting a new
business? Where can
entrepreneurs get assistance and
find tools for success?
•
•
What are funding sources for small
businesses?
What contribution does small
business make to the economy?
Copyright © 2011 by Nelson Education Ltd.
•
LO1 Explain the key reasons
to launch a small business
•
LO2 Describe the typical
entrepreneurial mindset and
characteristics
•
LO3 Analyze the
opportunities and threats
that small businesses face
•
LO4 Discuss ways to
become a new business
owner and tools to facilitate
success
•
LO5 Discuss funding options
for small business
•
LO6 Explain the size, scope,
and economic contributions
of small business
2
LAUNCHING NEW VENTURES:
WHAT’S IN IT FOR ME?
•
•
•
•
•
Greater Financial Success
Independence
Approximately 2.6 million
Flexibility
Canadians are selfChallenge
employed. Another million
work for firms with four or
Survival
fewer employees.
Copyright © 2011 by Nelson Education Ltd.
L01
3
ENTREPRENEURS
Entrepreneurs – People
who risk their time,
money, and other
resources to start and
manage a business.
Copyright © 2011 by Nelson Education Ltd.
L01
4
THE ENTREPRENEUR: A
DISTINCTIVE PROFILE
Copyright © 2011 by Nelson Education Ltd.
L02
5
OPPORTUNITIES FOR SMALL
BUSINESS
• Opportunities:
–
–
–
–
Market Niches
Personal Customer Service
Lower Overhead Costs
Technology
Copyright © 2011 by Nelson Education Ltd.
L03
6
THREATS FOR SMALL
BUSINESS
• Threats:
– High Risk of Failure
– Lack of Knowledge and
Experience
– Too Little Money
– Bigger Regulatory Burden
Copyright © 2011 by Nelson Education Ltd.
L03
7
SMALL BUSINESS FAILURE
Copyright © 2011 by Nelson Education Ltd.
L03
8
FAILING WITH STYLE
• Walt Disney was fired from an ad agency
for a “singular lack of drawing ability.”
• Ray Kroc, McDonald’s founder, failed at
real estate, he didn’t discover the
McDonald brothers’ hamburger stand until
he was 52 years old.
• Steve Jobs, founder of Apple computer,
was dumped by his board of directors, but
returned a decade later to launch the iMac
and the iPod.
Your failure may be your first step to the next big thing.
Copyright © 2011 by Nelson Education Ltd.
L03
9
LAUNCH OPTIONS
• Starting from scratch
• Buying an established business
• Buying a franchise
Copyright © 2011 by Nelson Education Ltd.
L04
10
STARTING A BUSINESS FROM
SCRATCH
Key Pros:
Key Cons:
• It’s all you : Your concept,
your decisions, your
structure.
• You don’t have to deal with
the prior owner’s bad
decisions.
• It’s all you. That’s a lot of
pressure.
• It can be hard to get credit.
• Logistics can be challenging
• It takes time, money, and
sheer sweat to build a
customer base.
Copyright © 2011 by Nelson Education Ltd.
L04
11
BUYING AN ESTABLISHED
BUSINESS
Key Pros:
Key Cons:
• The concept, organizational
structure, and operating
practices are in place.
• Working with someone
else’s idea may not be fun.
• Relationships are
established.
• You may inherit old
mistakes.
• Obtaining financing is less
challenging.
Copyright © 2011 by Nelson Education Ltd.
L04
12
BUYING A FRANCHISE
Key Pros:
Key Cons:
• Partnering with
established brand
• Less opportunity for
creativity
• Possibility of assistance
with management and
financing
• Tied to national brand’s
mistakes
• Low failure rate
Copyright © 2011 by Nelson Education Ltd.
• Purchase price and ongoing royalties can be
steep
L04
13
TOOLS FOR BUSINESS
SUCCESS
• Gain Experience
• Learn from Others
• Educate Yourself
• Access Resources (e.g.,
Canada Business)
• Develop a Business Plan
Copyright © 2011 by Nelson Education Ltd.
L04
14
BUSINESS PLANS: THE ROADMAP
 Executive Summary
 Description of Business
 Competitive and Industry
Research
 Marketing Strategies
 Operating Procedures
 Personnel
 Financial Projections
Copyright © 2011 by Nelson Education Ltd.
L04
15
FINDING THE MONEY:
FUNDING OPTIONS
• Personal Resources
• Loans
• Angel Investors
• Venture Capital
Copyright © 2011 by Nelson Education Ltd.
L05
16
SMALL BUSINESS AND THE
ECONOMY: AN OUTSIZED IMPACT
• Creating New Jobs
• Fueling Innovation
• Creating Opportunities for Women
Copyright © 2011 by Nelson Education Ltd.
L06
17
ECONOMIC IMPACT
Just 9.8% of the world’s entrepreneurs
expect to create almost 75% of the jobs
generated by new business ventures in
the next five years.
Source: Global Entrepreneurship Monitor, special report, 2005.
Copyright © 2011 by Nelson Education Ltd.
L06
18
SOMETIMES LESS IS MORE
Eric Truran, founder of a small New England
manufacturing firm and retail store, eventually closed his
retail store to focus strictly on online and telephone sales.
– His income dropped by about 50%, but his free time
more than quadrupled.
– He went from working 80 to 90 hours a week to
working 15 to 20 hours a week.
– He uses his free time to pursue other passions,
such as playing guitar with his two bands.
Copyright © 2011 by Nelson Education Ltd.
L06
19
THE ENTREPRENEURIAL SPIRIT
Intrapreneurs - are
innovative workers who focus
on launching new products
and generating new profit
streams for the company that
employs them.
Copyright © 2011 by Nelson Education Ltd.
L06
20
THE ENTREPRENEURIAL SPIRIT
Minipreneurs – individuals
launching super small scale
enterprises. Include
microbusiness, freelancers, side
businesses, weekend
entrepreneurs, hobbypreneurs,
Web-driven entrepreneurs, free
agents and more..
Copyright © 2011 by Nelson Education Ltd.
L06
21
THE ENTREPRENEURIAL SPIRIT
Mompreneurs – mothers who
start home-based businesses,
often motivated by the wish or
need to remain home with their
children. Sometimes these
businesses become successful
enough to employ other family
members.
Copyright © 2011 by Nelson Education Ltd.
L06
22
ENTREPRENEURSHIP, A
WORLD OF DIFFERENCE
• Entrepreneurship has an economic impact in
countries around the world
• Three key factors drive entrepreneurship
globally:
– Economic Welfare and Opportunity Costs
– Cultural Environment and Population
Demographics
– Institutional Characteristics and the Political
Environment
Copyright © 2011 by Nelson Education Ltd.
L06
23
ENTREPRENEURSHIP
AROUND THE WORLD
Copyright © 2011 by Nelson Education Ltd.
L06
24
LOOKING BACK
•
LO1 Explain the key reasons to
launch a small business
•
Why do individuals start
businesses?
•
LO2 Describe the typical
entrepreneurial mindset and
characteristics
•
What is the mindset and what are
the characteristics of an
entrepreneur?
•
LO3 Analyze the opportunities
and threats that small
businesses face
•
What are the opportunities and
threats for small businesses?
•
LO4 Discuss ways to become a
new business owner and tools
to facilitate success
•
•
LO5 Discuss funding options
for small business
What are options for starting a new
business? Where can
entrepreneurs get assistance and
find tools for success?
•
LO6 Explain the size, scope,
and economic contributions of
small business
What are funding sources for small
businesses?
•
What contribution does small
business make to the economy?
•
Copyright © 2011 by Nelson Education Ltd.
25